The Future Jobs Fund: what a waste

Post date: 23 Nov 2012

The Department for Work and Pensions today published an analysis of the impacts and costs of the Future Jobs Fund. The impact analysis was peer reviewed by Helen Bewley of NIESR; the methodology and approach is very similar to that used by DWP, and also peer reviewed by NIESR, in previous impact analyses of Work Experience and Mandatory Work Activity, and Helen's own research on reoffending for the Ministry of Justice. The bottom line is that the impact of the Future Jobs Fund (FJF) on the chances of participants being employed and/or off benefit was substantial, significant and positive. 2 years after starting the progamme (so long after the programme itself had ended, so the participants were back in the open labour market), participants were 11 percentage points more likely to be in unsubsidised employment. This is a very large impact for an active labour market programme (considerably larger than that found for New Deal for Young People, for example) suggesting that the programme had a large and lasting impact on participants' attachment to and ability to succeed in the labour market.

[What the chart shows is that participants and "matched non-participants" werre observationally equivalent before the programme. On entering the programme, there was a huge jump up in FJF participants employment, because of the programme; but that positive impact on employment lasted long after the programme ended.]A similar graph shows that the FJF had a substantial and persistent impact on benefit receipt as well:

Two years after the programme started, benefit receipt was 7 percentage points less among programme participants. In other words, in terms of its most important objectives, the programme was an unqualified success. That doesn't mean it was perfect, or that we should bring it back in its old form: see Tony Wilson's excellent history and policy discussion here. But this is what a successful government policy looks like. Also worth noting, and new in this DWP analysis, in contrast to the previous ones cited, is a cost-benefit analysis (not peer-reviewed by NIESR, although I have a great deal of confidence in DWP's ability to perform such analysis competently). It finds:

"The FJF programme is estimated to result in:

a net benefit to participants of approximately £4,000 per participant;

a net benefit to employers of approximately £6,850 per participant;

a net cost to the Exchequer of approximately £3,100 per participant;

and a net benefit to society of approximately £7,750 per participant."

Again, these are exceptionally positive results for a labour market programme. The net societal benefits, and the implied economic rate of return, are large, even given the relatively conservative assumptions on economic and social benefits used by DWP. Overall, the results of DWP's analysis are in sharp contrast to the assertions by the Ministers, including the Prime Minister, that the FJF was a waste of money - "one of the most ineffective jobs schemes there's been." Quite the opposite; although no doubt more research could usefully be done, the DWP analysis suggests the FJF was actually one of the most effective such schemes in recent history. So what can we conclude from this? Once again, as with the previous studies, I'd like to congratulate DWP for performing a high quality impact analysis, peer-reviewing it, and publishing the results. But the main point that emerges from this is that taking snap decisions without any evidence is bad for taxpayers, bad for the economy, and bad for society as a whole. The Prime Minister might have been right that the FJF would turn out to be a waste of money. But, until we had proper evaluation and analysis, we didn't know. And we knew at the time we didn't know, as the Work and Pensions Committee pointed out:

"We found that it was too soon to assess whether the Future Jobs Fund has been successful in supporting unemployed young people in finding permanent employment. It is also too early to say whether the FJF is a cost-effective method to support young people facing significant obstacles to employment."

Well, we know now; the Prime Minister was wrong. . But it's too late: the programme has already been cancelled, so instead of spending money on something we now know works - for young people on the dole, for employers, and for society as a whole - we're spending it on other things. And we don't know (yet) if they work or not. That's a real waste.

Off the back of the success of FJF, Scottish Government created Community Jobs Scotland (CJS). CJS created 1,800+ jobs across Scotland last year for 16-24 year olds and this year aim to create a further 1,400 jobs for 16-19 year olds. More details here: www.scvo.org.uk/cjs

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